The continued maintenance of the EU Taxonomy, widely regarded as the world’s leading standard, is a welcome development. Clarity on sustainability issues is vital for both investors and corporates. As Chair of the EU Platform on Sustainable Finance, I welcome the preservation of the Taxonomy on this critical issue and that many of the Platform’s recommendations have been taken on board. These include:
* First, a systematic and thorough review of all technical screening criteria, particularly the DNSH criteria, to assess ways to simplify and improve usability. The Platform has identified many of these criteria and how they can be made more user-friendly.
*Second, the review of the Disclosures Delegated Act, which will include, for example, how to best address issues related to differences in the scope of the numerator and denominator of the current GAR.
*Third, the establishment of a materiality threshold based on Taxonomy eligibility for non-financial companies when reporting Taxonomy KPIs. For financial institutions, this means not assessing compliance with the Taxonomy criteria for 10% of their assets (loans, investments) financing Taxonomy-eligible activities, while focusing that assessment on the remainder of their assets.
*Fourth, significantly shortened and simplified reporting templates.
*Lastly, pleased to see partial alignment ( a long-time call from already the times of the TEG) has made it.
This is a preliminary personal reaction. The EU Platform on Sustainable Finance will provide a formal response to the Consultation and remains at the Commission’s disposal for any further support needed.
Likewise, upholding existing rules (not least the double materiality) on transition plans alongside the Taxonomy—with €530 billion already invested in key mitigation sectors in line with the Taxonomy—will help strengthening transition finance, supporting an industry worth tens of billions to the EU economy in the coming years.
However, an area of serious concern remains: the compromise on the requirement for medium-sized enterprises to report on their climate impact, Taxonomy alignment( more than 80% ) , and a set of essential indicators.
It is important to consider companies’ concerns about the burden and costs of fulfilling these requirements. At the same time, investors need access to this data to facilitate the flow of private capital needed to close the EU’s investment gap, achieve carbon neutrality, and meet the EU’s environmental goals—all while stimulating economic growth and competitiveness. Moreover, ensuring access to green and transition finance is crucial for companies seeking to invest in sustainable transformation, a key element of their transition.
As such, it would be beneficial to establish a mechanism for the gradual introduction of these reporting standards—such as a simplified framework—that strikes a balance between the needs of both companies and investors. #OMNIBUS #Sustainable Finance
